|Consumers Buy More, Willing
to Pay More, for Milk Labeled rBGH-Free
Business News Keywords
MONTANA STATE UNIVERSITY, DAIRY LABELS, BOVINE GROWTH
HORMONE, DAVE BUSCHENA, KRISTINA KIESEL, VINCENT SMITH,
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A Montana State University study suggests that voluntary
and credible GMO-free labeling provides price premiums
for milk producers.
Newswise — When dairy companies voluntarily labeled
milk as having no added bovine growth hormone, they
increased sales and increased the price people were
willing to pay for their product, a Montana State University
master's study reports.
The work is thought to provide the first estimates
of the impact of voluntary labeling related to biotechnology
issues on retail purchases of a food using regional
and national sales data. The question for ag producers
is whether voluntary labeling has particular value when
highlighting a comparison to biotech products, says
MSU Economist Dave Buschena.
Former MSU student Kristin Kiesel and MSU economists
Buschena and Vincent Smith published a study based on
Kiesel's master's thesis in the May edition of the "American
Journal of Agricultural Economics." Buschena was
Kiesel's adviser at MSU. She is now studying for her
doctorate at the University of California at Berkeley.
Genetically engineered bovine growth hormone, or rBGH,
has been called the first major biotech product for
food production approved by the FDA. Critics claimed
that injecting dairy cows with the engineered hormone
led to a human health hazard due to possible increased
antibiotic use in those cows and increased presence
of Insulin-Like Growth Factor-1 in the resulting milk,
despite the lack of scientific evidence for their claims.
Because of the claims, some dairy companies began to
voluntarily label their milk as having been produced
"The data I worked on was milk data, but it should
apply to any food product and other types of health
and environmental related product labels," said
Kiesel in a telephone interview from Berkeley.
Kiesel said she was able to use data gathered whenever
grocery shoppers had products scanned by a laser-reader
at check out. The store gathers information about the
purchases based on a product's computer code, which
is called its uniform product codes or UPC. Stores frequently
make that data available to outside firms. Recently,
researchers have also been able to use this data.
"The main interest for me is how customers make
decisions and how these decisions are influenced by
available information such as the information provided
on a product label," said Kiesel.
Buschena emphasized the importance of the study to
milk producers and milk processors. "Voluntary
labels in this case were effective in increasing prices
that consumers are willing to pay in stores."
Kiesel is extending her concept into a doctoral thesis
that looks at both labeling of organic products and
household demographics of the people who buy those products.
Kiesel's new focus includes the new national organic
standards and changes in labeling requirements.
"I'm looking at how the new USDA organic labeling
seal affects consumer purchases, how much the standardization
and government certification is worth to the consumers
and how much it costs to put these new regulations and
labels in place," Kiesel said. She added that for
organic food, it is not clear what kind of information
is being valued and best serves consumers interest,
whether it is the certified organic label or whether
a phrase like "all natural" might work as